Mortgage Blog
Bank of Canada Rate Announcement - September 17, 2025
September 17, 2025 | Posted by: Crescent Mortgage Corp.
The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.50%. This move was largely expected by financial markets and represents the BoC’s first cut since March.
After remaining resilient in the face of higher US tariffs and ongoing uncertainty, global economic growth is showing signs of slowing. South of the border, consumers are cautious and employment has slowed. US inflation has creeped upward over the past few months as businesses begin to pass along some tariff costs to consumer prices.
Canada’s GDP declined by about 1.50% in the second quarter, as tariffs and trade uncertainty weighed heavily on exports and overall economic activity. Consumption and housing activity both grew at a healthy pace but slowing population growth and weakness in the labour market will likely weigh on household spending in the coming months.
Employment has declined in the past two months with job losses mostly concentrated in trade-sensitive sectors. The unemployment rate has increased, reaching 7.1% in August.
CPI inflation was 1.9% in August, while the preferred measures of core inflation have been around 3% in recent months. However, the upward momentum seen earlier this year has dissipated. The federal government’s recent decision to remove most retaliatory tariffs on imported US goods will place less upward pressure on prices going forward.
With a weaker economy and less upside risk to inflation, the BoC judged that a reduction in the policy rate was appropriate to better balance the risks. The BoC remains focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. They continue to support economic growth while ensuring inflation remains well controlled.
The next scheduled date for announcing the overnight rate target is October 29, 2025.